All Forum Posts by: Amy E.

I am not a hard nosed business person at all, and have lowered rent to keep a good tenant.  But I only lowered it to what my minimum profitability requirement was, which varies by house.  I also do lower income rentals, so the turnover costs can be a bit prohibitive compared to the value of the house and I have to screen through a bunch of applicants and as a result it can take up to a month for me to rent one.  All this lead me to keep my existing tenant and lower the rent a bit.

If you are already at the low end of what is profitable for you, you can easily find good tenants, you have a signed lease which requires compensation if the existing tenant breaks it, and turnover costs aren't high, then I'm with the other guys and would probably not recommend you lower rent.

Awesome, how long did it take you?

Hey,

Anyone in GA being affected by the new mandate by DHA to use their internal website for comparison houses to justify rents?  I live in a rural area and only do 4 bedroom houses and they could not find comps in my zip code (plenty in the county, just none in that zip code).  I ended up going with another renter, but Section 8 housing is my bread in butter.  

I only have one data point, but when I asked the case worker how houses were added into the system, she didn't know.  None of my houses that I already had rented (two section 8, one not) were in the system for comparisons.  She was not allowed to use my other houses since they weren't in the system.  I asked if I could have access to the system and she said no.  I asked if there was a way to add my other houses in as comps and she wasn't sure.

I emailed the state asking for clarification on how comparison houses were selected and added to this new system.  All I received is an automated response saying that they would get in touch (they never did).  I called the state, and the person who answered referred me back to the email address I had already used.

I'm concerned about the transparency of this new website.  If I can't even get my other houses added as comps, what's to stop the state from only loading the cheapest houses?  And where are these comps coming from anyway.  My realtor said that there is no database for currently rented homes (like there is for taxes and sale prices with the county).

Anyone have a POC at DHA that can explain or assist?

Like I said, I had no problem renting to a non-DHA tenant.  But I've found its bunches easier to go with DHA if at all possible.

Robins is not getting shut down.  We are not even on the BRAC list.  Additionally, the #1 think the DoD looks at when shutting down a base is the economic impact.  That alone will keep it open.  Dobbins, on the other hand, is in Marietta, close to Atlanta, with a bazillion other industries around it.  

If you are used to a big city life and crime is common, Macon may be okay for you to invest in.  I do section 8 in WR and they always need housing and ask if I have homes in Macon

I would not invest in Macon expecting to attract Mercer students.  I was a Mercer student.  I can tell you that there is no way I would've lived anywhere close to the campus unless I was actually ON campus.  It's just not the best area of town.  Several guys I know did live in and around college street, but very few girls did.  As a parent, I would not let my kid live in that area.  

That said, I have contemplated buying a multi-family closer to the law school and medical school, hoping to attract some guys to rent.  Not that I wouldn't to girls, its just as a female myself there is no way I would've felt safe walking to campus (either the main campus or the law school).  A couple houses came up for sale last year that were right across from the law school campus, literally across the street.  Even so, the numbers just did not work.  And, keep in mind, most of those houses are quite old and they have the issues that all old houses have, even if they're in great shape.

I'm not sure I'd flip in that area, either, because who's gonna buy?  Maybe a professor or something, but most professionals buy in North Macon.

Depends on the house, one house I had to completely replace the sill....it was dust, I'm not sure how the roof did not start to sag.  Another it is about 3 feet up the wall, 6 feet wide, not very extensive, the wood is still solid.  The other houses I have not pulled back drywall but I can see where they have had previous termite treatments.

Do you guys pay for termite inspections/bait?  All of the rentals I have show signs of previous termite damage, but no active termites.  I looked into setting out the bait/traps myself and monitoring, but it seems like a lot of time involved for not much cheaper than paying someone to do it.  Of course "monitoring" would be a yearly expense that never ends....

Thoughts?

I found our local REIA for Macon, GA on Meetup.com, you may try that for your area.

@Brandon Hall

Hi Brandon!  Thanks for the response.  I was told that if I make return of capital distributions that I can subtract that from my total revenue and thus it will look like I had less (or none) profit, even though members were distributed some cash.  Is this correct?

And back to my real question, is it a good idea (from a tax standpoint) to return the capital or leave it in the business long term (I'm sure the answer will be, it depends, just want to know what factors are involved).

Whoops, I'm sorry the post makes no sense because I hit go while I was copy/pasting....:

You're right, its taxed as income, just not earned income.  And I do not intend to sell this year, or anytime soon.  So what I'm really asking is would it be better to return capital now , or keep my capital in and return it later?  From the business' perspective, if I have to make return of capital payments, then there is no profit and thus no taxes on the personal side (until I've returned all the capital, of course).

It's kinda the Roth IRA vs. Regular IRA question. If tax brackets remain equal, its a wash. But if tax brackets change, then one is better than the other.

I just want to make sure I am considering all the factors, and not just the taxes now vs. later issue.

We have a multi-member LLC are at the point that we want to begin taking money from our rental business. We can choose that the return is either counted as "return of capital" or "profit". If I take a return of capital, I do not have to pay any taxes now, but my basis in the business will be larger and I will owe regular income tax on any earnings if we sell. For example, if we put in $30,000 capital, but the business is sold for $100,000, we would only owe taxes on $70,000 when we sold. Since the $70,000 is business profit and not rental income, it would be taxed at the regular income tax rate. If I take return of capital now, I will have no capital in the business anymore and when we sell I will owe tax on the full $100,000. Alternatively, if I take profit now, any profit is taxed at the capital gains rate because it is rental income and my capital remains in the business.

I am in the 25% personal tax bracket, but my partner is only in the 15%.  We do not anticipate selling anytime soon (intend to keep the business a couple decades) and it is doubtful either of us will change tax brackets.  

Pros and Cons of one vs. the other?